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Saturday, April 27, 2013

Conspiracy theorists of the world,
believers in the hidden hands of the Rothschilds and the Masons and the
Illuminati, we skeptics owe you an apology.
You were right. The players may be a little different, but your basic premise
is correct: The world is a rigged game.

Welcome to the real world, Matt.

He bases this on a couple of scandals that have recently
come to light:

…the fact that there may now be
price-fixing scandals involving both Libor and ISDAfix suggests a single, giant
mushrooming conspiracy of collusion and price-fixing hovering under the ostensibly
competitive veneer of Wall Street culture.

He believes this opens up the possibility that everything is
rigged:

If true, that would leave us living
in an era of undisguised, real-world conspiracy, in which the prices of
currencies, commodities like gold and silver, even
interest rates and the value of money itself, can be and may
already have been dictated from above. And those who are doing it can get away
with it.

Even interest rates! And the value of money!!! Say
it ain’t so.Who or what is powerful
enough to rig interest rates – the price for time and risk of the commodity that is one side of
every single transaction in a division-of-labor economy - and rig the price of the money itself?

Matt thinks there is something new here:

These banks, which already possess
enormous power just by virtue of their financial holdings – in the United
States, the top six banks, many of them the same names you see on the Libor and
ISDAfix panels, own assets equivalent to 60 percent of the nation's GDP – are beginning to realize the awesome
possibilities for increased profit and political might that would come with
colluding instead of competing.

The banks are only now beginning to realize this?Come on, Matt – the world didn’t begin on the
day of your awakening.Those high up in
banking have known this for centuries.Those
on the outside have, for the most part, remained blind…until recently… thanks
to the internet and a certain (now former) congressman from Texas.

The banks have been colluding in the US with government
permission for one hundred years – I think they realized the possibilities of collusion
well before they had an official sanction to collude.

He finds fault in the justice system:

Two of America's top
law-enforcement officials, Attorney General Eric Holder and former Justice
Department Criminal Division chief Lanny Breuer, confessed that it's dangerous
to prosecute offending banks because they are simply too big. Making arrests,
they say, might lead to "collateral consequences" in the economy.

…this all-star squad of white-shoe
lawyers came before Buchwald and made the mother of all audacious arguments….
the banks could not possibly be guilty of anti- competitive collusion because
nobody ever said that the creation of Libor was competitive.

Not one comment pointing to the Federal Reserve or central
banking.I guess I welcomed Matt to the
real world a bit prematurely.

The only reason this problem has
not received the attention it deserves is because the scale of it is so
enormous that ordinary people simply cannot see it.

In fact, the problem is so enormous that even Matt does not
see it.He thinks the corruption and collusion
has its roots in the too-big-to-fail banks, without asking anything about what or
who is behind the too-big-to-fail banks.

The reason the problem has not received the attention it
deserves is because the politicians and much of the mainstream media is in on
the scam – knowingly or unknowingly.

How many people support the end of central planning in money
and credit?How many support
market-derived banking?

Conversely, how many call for better regulation or better
regulators?How many call for justice
from people employed by the same people who enable the system in the first
place?

Matt, you are inching closer.Perhaps one day soon the scales will be fully
lifted from your eyes.The market could
never support corruption on this magnitude.Keep looking, with honest intent, and you will find the answer.

Friday, April 26, 2013

Having reviewed the fall of
Rome, Latouche next turns to the earliest beginning of medieval society and
economy in his book “The
Birth of Western Economy.”He
describes several aspects of this period of transition.

The Migrations

He begins with the earliest migrations:

The Roman Empire recognized two
great Germanic families: the Western Germans who for long centuries had been
settled in continental Europe, and the Northern and Eastern Germans who had
emerged in more recent times from Scandinavia.

There were mentions of immigration into the Roman Empire by
Germanic people as early as the late first / early second century.

…the Germans then gradually and by
progressive stages penetrated into the Empire along the entire length of the limes in ever-increasing numbers….

Eventually, the numbers were significant enough that
treaties were negotiated with Rome, recognizing the various tribes as
“federates.”

…most of the barbarians who
penetrated into the Western Empire came not as conquerors, but exactly as in
our own day…to look for work.

The conquest was not so much a military one; Rome fell as
much due to the apathy of the productive caused by the economic policies of the
state as it did from anything else.What
did the barbarians conquer?They came to
an undeveloped land.The forest was
their enemy; the bogs were their subjects:

He had to wrest from virgin forest,
from moorland and sometimes from bog, the land on which he settled, and the
task of bringing Central Europe into cultivation was a slow and unremitting
process of land clearance which went on until late into the Middle Ages.

Private Property

These migrants apparently did not make the same mistake as did
the Pilgrims of New England.Counter to
the views of some – and built on a faulty reading of historical (but not more contemporary)
sources – the cleared land was not held in community ownership, but in private
ownership.

The historian Fustel de Coulanges
set out to demolish this edifice built on sand….the Franks and other Germanic
peoples from very ancient times practiced individual ownership, and that the alodis frequently referred to in barbarian laws is the
equivalent of the Latin hereditas, and is none
other than the hereditary estate.

There was some land common to the community, primarily
forest land.This demonstrates a rather
sophisticated view of private property – that of homestead.The cleared land was viewed as private property;
the land in an unimproved state was not.This concept of individual ownership was captured, for instance, in the Salic Law:

What a study of the Salic Law does
bring out…is the strong preference of the Franks for individual ownership….One single word, which has had an
extraordinary history, symbolizes the sacrosanctity of hereditary property – it
is the word ‘alleu’ [freehold] (alodis).In the very beginning this word stood for the
ancestral home and its appendages.Subsequently it was extended to include the arable lands.

This freehold of property was an important feature throughout
the Middle Ages, first coming up against resistance in England in the time of William
the Conqueror in the eleventh century, when he
claimed all land as his own, with the nobles as his tenants.

Wednesday, April 24, 2013

I have written in the past about the hidden history of the
Middle Ages, first regarding law
and kingship, and most recently about the societal
relationships – far more liberal that what preceded or followed this
period.

I am now reading a book about the economy during this time
period, “The
Birth of Western Economy,” by Robert Latouche, first published in French in
1956.

I intend to cover this book in more than one post, as I have
done with other books in the past.In
this post, I will introduce the author’s general themes, and offer some detail
regarding his descriptions of the fall of Rome – details that offer eerie
similarities to what we see in the west today (yes, I know, this is a tired
theme.For me, I have never spent time
in this area.I will do so here.)

Latouche is not necessarily favorable toward free markets –
being supportive of state coinage, efficient taxation, and price controls.I believe it is appropriate to recognize this
throughout my review of his work in order to place his interpretations in
context, while at the same time remaining focused on his more factually-based
descriptions of the period.

Introduction

Latouche describes his purpose in this work:

…to trace the gradual development
of economic life in Western Europe during the period ending with the eleventh
century…. It is harder to know where to begin than where to end.We shall choose that point of time which saw
the break-up of the Mediterranean economy, known also by a more general term –
the economy of the ancient world.

He describes some of the myths, or “idols” as he labels
these, which must be confronted: the false labeling of the medieval economy as
a “natural economy, in contrast with the “money economy” that is suggested to
have both preceded and followed this Middle Age; the false notion of a “closed
economy,” fully self-sufficient within a
single domain; the reality of small landowners side-by-side with the great
landowners; and the continuation of city life after the fall of Rome through
the entire period under study in this work.

Before he gets to the Middle Ages, he spends time on Rome’s
fall.

The State Control that Marked
the End of Rome

Latouche describes the last centuries of Roman rule: an
economy that showed signs of deterioration as early as the late second century
A.D., and, via state intervention, the attempts in the third and fourth century
to halt and reverse the deterioration.In his descriptions, I find much that is too familiar in our own time.

The Elder Pliny was no doubt being
rather absurd when he expressed that generals no longer cultivated the land….
Wistfully they looked back to those far-off days, which seemed like a golden
age, when the State of Rome, confined within the narrow bounds of Latium, was
inhabited by small landowners who were at the same time ploughmen and soldiers.

Could this not describe America, both literally and
figuratively?In the literal sense, a
“narrow bound” along the eastern seaboard, populated by men “who were at the
same time ploughmen and soldiers”?Figuratively, America has certainly moved significantly toward a land
populated by a growing proportion of people who consume without first
producing.

The Romans were not content with
asking their conquered peoples to feed them, a demand which in itself was
already causing uneasiness, but even more serious in its consequences was the
fact that conquest brought them undreamed of wealth, which they looked upon as
inexhaustible.

It is interesting to consider the conquests of the U.S. –
certainly in the last century, it has not been a conquest for direct control of
land, but a conquest
for controlling the subject population – control brought on by the
implementation of institutions favorable to regulated democracy, beginning with
a central bank.Such wealth does seem inexhaustible
in our day as well – the status of the dollar has allowed for Americans to
consume in abundance,
in exchange for pieces of paper painted with the pictures of dead
presidents.

The skillful exploitation of these
riches…won for the West two centuries of prosperity symbolized in two words: pax romana; but a prosperity so suddenly achieved was by
its very nature too artificial to stand up to hard knocks.

No comment necessary, I believe.

Life in Rome during the first
century was undoubtedly attractive; there was bustle and movement, endless
argument and discussion, entertainment in plenty, and even a certain amount of
work.But the population of this
Babel…which drew in the produce of the whole world like an octopus, was being
fed at the expense of the ‘Public Assistance” by free distributions of every
kind.

When I first contemplated comment on this chapter of the
book, I considered using passages such as the ones cited here in a manner
portraying these as if they were written about the West, and particularly the
US, today – only at the end revealing the statements as applying to Rome.Had I done so, would you have nodded your
head while reading these lines?

Tuesday, April 16, 2013

I have previously
written about the political and legal framework of the Middle Ages, for me
an eye-opening view into a decentralized society, where law was based on custom
and agreements bound by oath; where the king was not superior to the law, but
servant to it – with standing no higher than the lords; where each lord had
veto power.

In this post, I will look at various aspects of social life
in the Middle Ages.These include arts
and letters, serfdom, women in society, religious tolerance, and finally, some
additional aspects of the role of the king.For this, I will use excerpts from a wonderful book by Régine Pernoud, entitled
“Those
Terrible Middle Ages: Debunking the Myths.”The book was originally written in French, published in 1977.

Régine Pernoud (17
June 1909 in Château-Chinon, Nièvre - 22 April 1998 in Paris) was a historian
and medievalist. She received an award from the Académie française. She is
known for writing extensively about Joan of Arc.

The book is an easy read; Pernoud does not exhaust the
reader with significant details and footnotes.This is not to suggest that there is no depth – her target audience is
not the academic community.She writes
here with a view toward busting the prevailing myths about the Middle Ages –
myths that circulate in both professional and lay circles.I find in this work a good amount that
confirms my earlier reading in this time period, as well as new insights that
are presented credibly.

Pernoud has written this book in a tongue-in-cheek manner –
the each chapter title is in the form of a myth regarding the Middle Ages, for
example: “Clumsy and Awkward,” “Crude and Ignorant,” and “Women without
Souls.”In the course of each chapter,
she describes and then debunks each of these myths.

Through my earlier work on the subject of the Middle Ages, I
gained an appreciation of the development of a decentralized society, with
decentralized law and political power.Pernoud, in this book, adds color to my view: the result of
decentralization, as one should expect, was a flowering of liberal attitudes
towards many subjects – in most ways more liberal than the Rome that preceded
it, and the Renaissance that followed it.

I begin with a comment from the forward, written by
Cornelius Michael Buckley:

The Middle Ages – those one
thousand years of Western history between 500 and 1500 A.D. – witnessed the
abolition of slavery, the liberation of women, checks and balances on
absolutism, artistic achievements of medieval cathedrals, inventions of the
book, the musical scale, and the mechanical clock.Why is it then that the very term Middle Ages is equated, even in the minds of so-called
educated people, with such ideas as feudal servitude, cultural darkness,
massacres, famines, and plagues?

Pernoud attributes such ignorance
in part to classicism, which became predominant in the sixteenth century…. The
revival of Roman law brought about legal standardization in the interest of
centralized nation states.The Roman
notion of the jus utendi et abutendi, the
unrestricted rights of property, put an end to the legal rights enjoyed by
medieval serfs and feudal lords. The
result was the reintroduction of slavery, the subjection of women, the
exploitation of the worker, and the rise of the absolutist state.

Several of these points raised by Buckley I had not
previously considered.I will touch on
only one now, as it is a notion that runs counter to my free-market and
property-rights views.

JUS ABUTENDI.
The right to abuse. By this phrase is understood the right to abuse property,
or having full dominion over property.

Right of the owner to use it in a
full and exclusive manner (art. 832 cc), which also implies the ability to
decide whether and how to use it, transform it and, ultimately, to destroy it.

This topic will be explored further, however it seems
medieval law regarding property placed limits on the use of the property – the
property owner did not have the right to destroy his property.The property-rights purist in me asks, why
not?

It seems, the lack of the ability to destroy tied the lord
to the land to the same extent as the serf was tied to the land – in other
words, there was something about this concept (which at the moment I don’t
fully grasp, and may never fully grasp) that leveled the playing field between
lord and serf – both were tied to the land, albeit at quite different levels.

In any case, Pernoud’s book raises the curtain on this and many
additional topics.Throughout this post,
I include many links (primarily to Wikipedia entries).There are many characters introduced by
Pernoud; I personally found it helpful to gain additional background for
context and I thought it appropriate to include these links for this purpose.

Middle Ages: Fallacies and
Myth

Pernoud begins by describing some of the countless false and
mythical ideas she encounters regarding the Middle Ages:

I had recently been put in charge
of the museum of French history in the National Archives when a letter was sent
to me requesting: “Could you tell me the exact date of the treaty that
officially put an end to the Middle Ages?...In what city were the
plenipotentiaries gathered who prepared this treaty?”

Sunday, April 14, 2013

I take from your reply that you are sincere in this dialogue
– this was my belief until I saw some actions that seemed to indicate
otherwise.Thank you for clarifying.

Before I attempt to answer your question, allow me to offer
some background.For me personally, this
question of IP as property is somewhat interesting from a theoretical
standpoint, but not a terribly important concept to spend energy on.Again, I say for me.Obviously, for some people, it is
tremendously important.

Second, when it seems to me that the market will provide a
reasonably good policing and regulation system, I do not concern myself with
understanding the purity of the theory behind an alternative.One significant example of this is fractional
reserve banking.Both
Mises and Rothbard have offered that the market will regulate this practice
just fine.I agree.So why get so hung up about 100% reserves, or
if it is fraud or not?

For me, the same thing applies to IP.There is no doubt that in a libertarian
society, “inventors” will attempt to control something like the formula for
Coke, or “authors” the words in a book, via agreements of some sort.How will you stop them – by attempting to
demonstrate via a tremendously complex logical construct designed to prove to
them that they cannot?What if they disagree
with your theory and attempt to control it anyway?

So what happens next?I don’t know.In a free-market
for enforcement, I suspect at minimum there will not even be an attempt to
protect most of the frivolous IP stuff (whistling a tune, copying a written passage
on the internet), as – without the state aid- it will be too expensive to attempt
to do so.But the formula for Coke?Surely, when billions of dollars are at
stake, the attempt will be made.I will
offer, below, my thoughts on how the market might sort this out.

Now to your question:

How you can say an idea is property
that is the result of applying one's brain to the physical world...when
knowledge guides action, and therefore the idea must exist prior to any sort of
action in the physical world?

Too complicated, and would require too much time for me to
deal with (given my view that a market solution will work just fine), whatever
the answer.Call that a cop-out or a
failure on my part – my feelings won’t be hurt.For me, the answer is simple: I created the formula for Coke.It is mine.I have authority over control, use, and disposition of the formula.It is no different than if I built a chair –
I built it.It is mine.I have authority over control, use and
disposition of the chair.

You will reply that if someone else produces a bottle of
Coke, it does nothing to stop me from doing the same.But I say it isn’t the bottle of Coke that I
own (or merely the right / ability to produce one), it is the formula.Ownership (control, use, and disposition) of
the formula is indivisible, just as ownership of the chair is.

I concede that your logic might be more elegant than
mine.It is unimportant to me that this
might be so.I return to the beauty of
the market in resolving such issues.I am
certain that in a libertarian world, Coke would attempt to protect its
formula.After that, I say let market
forces figure out the result.

I find it interesting that you
continue to skip over my pointing out the non-rivalrous nature of the Coca-Cola
formula...

I believe I addressed this above, I only include your
statement here for completeness.If not,
I guess that means I have skipped over it again.

…and how your concept of having a
property right in it, allows you to come into my home and dictate what I can or
cannot do with my own ingredients.

You can do what you want with your ingredients, to include
stumbling upon my formula.If you copy
it via obtaining it from an avenue that traces back to me or someone I have
contracted with, however, I guess we will have a disagreement.

How might this be resolved in a libertarian world?I assume that a libertarian world would see
rival insurance companies and all of the stuff of libertarian conflict-resolution
dreams.I suspect insurance companies
that develop a skill at defending intellectual property will win market share
from customers willing to pay the price.I, for my blog, won’t be a customer at the price demanded.But I suspect Coke would.

For the possibility to earn countless millions in fees, insurance
companies might actually develop a good argument on Coke’s behalf – better than
anything Wenzel might come up with and certainly better than anything I have
written to date.You will certainly be
free to file a pro-bono argument for the other side.You will be free to explain your position to
your heart’s desire – scarcity, non-rivalrous, etc.All of it.In the end, someone will make a judgment.To the extent the market appreciates this
particular judge's decisions, he will gain market share.

This brings me to Hoppe – whatever your interpretation of his
statement at The Daily Bell, the following seems clear: while he obviously
sees the theoretical case regarding IP in the same way Kinsella does, he also
obviously leaves room for the market to sort it out.When considering the entire statement, can
you truly conclude otherwise?

I have no doubt that my answer is not intellectually
satisfying for you.You won’t get better
from me on this subject – there is little point for you to continue to try;
call me a lost cause, if you like.I find
more satisfaction in thinking and writing about other issues related to NAP,
Austrian economics, and decentralized societal structures.This is where I prefer to spend my limited
intellectual capital.

Saturday, April 13, 2013

This post is the result of a dialogue at The Daily
Bell.It was prompted by an editorial
written by Hugo Salinas Price, entitled “Of
Bubbles and Bitcoins.”The pertinent
comment in the editorial, and my feedback to it, as follows:

HSP: In the exchange of any given
merchandise for gold (or silver), neither of the parties to the interchange
ends up owing the other party. There has been "settlement."

BM: There is settlement when one
individual trades a coconut for a dollar bill. Neither owes the other anything
more.

I did not intend to write a post about this, but the
subsequent dialogue influenced my thinking.

I guess I am confused about the term “settlement.”Please bear with me….

I give you a coconut in exchange for your giving me an
apple.We agree that neither of us owes
the other anything more.This certainly
seems like a settled trade to me.

Now, I give you a coconut in exchange for your giving me a
gram of gold.We agree that neither of
us owes the other anything more.This also
certainly seems like a settled trade to me.

Let’s try another.I give
you a coconut in exchange for your giving me a plain white sheet of paper.We agree that neither of us owes the other
anything more.Is there something about
this trade that remains in the not-settled arena?It seems to me this trade is also settled.

I will now take one more step: I give you a coconut in
exchange for your giving me a piece of paper with a pretty painting on it –
perhaps a lovely seascape.We agree that
neither of us owes the other anything more.Not settled?No, I think still
settled.

Last step.I give you
a coconut in exchange for your giving me a piece of paper with a picture of a
dead politician on the front and a picture of some monument to the state on the
back.We agree that neither of us owes the other
anything more.

It is argued, at least by HSP and a few feed-backers at DB,
that this trade is not settled.But why
not?Neither party owes the other
anything more.

The closest answer comes from mava:

When you sell a coconut for a
dollar, you receive no settlement, because the dollar is only a promise, not a
good in itself.

But somehow, it is suggested that gold is different in this
regard.Why?Is not gold only a “promise” in the sense that
the term is used in this sentence?After
all, there is no guarantee regarding the future value or desirability of my
gold.Am I not dependent on someone
accepting the gold in the future for something I desire?

But wait (I hear it coming), gold is a good – it is a
commodity, useful for purposes other than money. Yes, I understand this.But what is a piece of paper with a painting
on it, other than a commodity, useful for purposes other than money?Is the argument that a painting of a seascape
fits this definition, but a painting of a dead politician does not?I hope not.

When you sell a coconut for gold,
you have settled the transaction, because you have already received something
in exchange, that does not depend on whether your buyer has funds (bounced
checks), or, whether the system is in good standing (such as is a big question
with the dollar and the bitcoin), or whether your bank happens to be on a
particula island (Cyprus).

Each of these apparent problems is equally an issue with
gold: a bounced check – equally a problem if you accept a certificate for gold
as opposed to the coin; system in good standing – what does this even
mean?A system is functioning or it isn’t
– the fiat system is functioning today as the primary means of trade for (my
guess) 99% of global transactions.This isn’t
enough?; bad bank – what about a bad vault?

But I greatly deviate from my original point.When I make a trade of something for
something, there is settlement.That I choose
to accept a piece of paper with a picture of a dead politician on the front and
a picture of some monument to the state on the back is my own problem, isn’t it?

The person who gave me that piece of paper owes me nothing
more. What more is there to settle?Any good I accept that is not for consumption
purposes comes with the same risk – that someone will want it when I am ready
to consume at some point in the future.

To avoid more strawmen – yes, I believe gold stands the test
of time better than pieces of papers with a dead politician’s picture on
it.But this doesn’t change the fact of
settlement when that paper is used in trade.

What is good for the micro is good for the macro.Only macro-economic-policy-planning-economists
believe otherwise.